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What Is an EIN?

Tax Forms

Employer Identification Numbers (EINs), sometimes called Federal Tax Identification Numbers, allow the Internal Revenue Service (IRS) to recognize a business for tax purposes. They are like Social Security Numbers (SSNs) for your business.

The only business entity that does not require an EIN is a sole proprietorship. Still, all business structures should strongly consider having one of these unique nine-digit numbers. The IRS provides guidelines that business owners can use to see if they need an EIN.

EINs can be obtained for free online, over the phone, by fax, or by mail. They can also be easily updated in the event the business makes a change of organization or ownership.

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Key Takeaways

  • EINs let the IRS identify your business so it can pay taxes. Most business structures are required by law to have them.
  • The IRS provides resources and guidelines to help business owners decide when they need an EIN.
  • EINs can be obtained online, over the phone, fax, or by mail.
  • EIN numbers can be changed if the business changes ownership or how it is structured.

Understanding EINs

The IRS provides a series of guidelines that inform business owners of when it is a good time to start thinking about getting tax ID numbers for their businesses. Those guidelines include:

  • Does the business hire employees?
  • Is the business operated as a corporation or partnership?
  • Does the business owner file tax returns for employment; excise; or alcohol, tobacco, and firearms?
  • Does the business owner withhold taxes on income, other than wages paid to a non-resident alien?
  • Does the business owner have a tax-deferred pension, known as a Keough plan?
  • Is the business owner involved in trusts, estates, non-profit organizations, farmers' co-ops, or real estate mortgages?
  • If the answer to any of these questions is "yes," owners should obtain an EIN.

Obtaining an EIN

Thankfully, the EIN application process is easy and business owners can apply at no cost. EINs can be obtained online, or by mail, fax, or telephone. A few helpful tips:

  • Applying online: You can apply for an EIN online with the IRS. Once the online application is submitted, the applicant will receive their EIN.
  • Applying via mail or phone: These methods require applicants to fill out an IRS Form SS-4. The IRS website provides instructions for filling out the form.

Changing an EIN

Existing business entities that are changing ownership or organizational structures are often required to get new EINs.

The IRS provides a comprehensive list of situations when a business should request a new EIN and the procedure for making any necessary changes.

Answering Your Legal Questions

You might be wondering if an EIN is right for your business. Regardless of your type of business, it's always best to contact a business lawyer who can guide you and answer your questions.

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Next Steps

Contact a qualified business attorney to help you navigate your business's taxes.

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  • EIN registration starts at $79

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